I 

\ 


LlttnAtu 

OF  THE 

DIVERSITY  OF  ILLINOIS 


i 


Univ.of  111.  Library 


53 

I  &  b  ^ 


MEMORIAL 


TO  THE 


GENERAL  ASSEMBLY  OF  THE  STATE  OF  INDIANA, 


OF  THE 


HOLDERS  OF  CERTIFICATES  OF  STOCK 


■ 


OF  THE 


- .  W 


WABASH  &  ERIE  CANAL, 


ISSUED  BY  THE 


'  I  I 

1 1 
/  I, 


■ 


STATE  OF  I  ADI  AAA. 


January,  lBTl. 


LIBRARY 
OF  THE 

UNIVERSITY  OF  ILLINOIS 


MEMORIAL 

OF  THE 

HOLDERS  OF  CERTIFICATES  OF  STOCK 

OF  THE 

WABASH  AND  ERIE  CANAL, 

ISSUED  BY  THE 

STATE  OF  IWDIASTA. 


>  <  ♦  >  < 


To  the  General  Assembly  of  the  State  of  hidiana : 

The  undersigned  Committees,  representing  the  holders, 
both  foreign  and  domestic,  of  the  stock  of  the  State  of 
Indiana,  secured  by  a  lien  on  the  AN abash  and  Erie  Canal, 
are  instructed  to  ask  your  attention  to  the  provisions  of  the 
acts  under  which  the  certificates  were  issued,  to  the  present 
condition  of  the  security,  and  of  the  stock  for  which  it  was 
placed  in  trust,  with  the  view  of  obtaining  from  you  such 
relief  as  in  justice  and  equity  the  bond-holders  may  be 
entitled  to. 

The  preamble  to  the  Act  of  1846  is  to  the  following  effect : 

“  Whereas,  honor  and  justice  alike  require  that  such 
equitable  provision  should  be  speedily  made  for  the  dis¬ 
charge  of  the  pecuniary  obligations  of  the  State  as  shall  be 


2 


just  and  acceptable  to  its  creditors,  honorable  to  the  people 
of  Indiana,  and  at  the  same  time  within  the  ability  of  the 
State,  without  further  involving  the  people  in  a  general 
debt ;  And  whereas,  an  arrangement,  based  upon  a  mode¬ 
rate  system  of  taxation,  and  completion  of  the  Wabash  and 
Erie  Canal  to  Evansville,  it  is  believed  will  secure  the 
objects  aforesaid ;  And  whereas,  in  order  to  insure  so 
desirable  a  result,  a  large  portion  of  our  bond-holders  have 
manifested  a  willingness  to  aid  in  the  completion  of  said 
canal ,  within  the  ensuing  four  years,  to  the  Ohio  River ; 
And  whereas,  this  proposition  embraces,  as  a  general  ar¬ 
rangement,  the  payment,!  by  taxation,  of  two-and-a-half 
per  cent,  on  the  unprovided  public  debt  of  the  State,  and  a 
reliance  for  the  remaining  two-and-a-half  per  cent,  on  the 
lands,  tolls,  and  water  rents  of  said  Wabash  and  Erie  Canal 
(after  paying  expenses  of  construction  and  repairs),  thereby 
greatly  relieving  the  people  of  Indiana  from  burdensome 
taxation,  and  virtually  discharging  them  from  any  liability 
for  the  said  remaining  interest ,  and  looking  alone  to  the 
said  canal,  its  tolls  and  other  revenues,  for  half  the  interest 
on  said  entire  public  debt;  And  whereas,  there  is  reason 
to  believe  that  the  plan  embraced  in  the  following  provisions 
is  entirely  within  the  means  of  the  State  successfully  to 
accomplish — that  it  will  be  acceptable  to  our  creditors — hon¬ 
orable  to  the  people  represented  by  this  General  Assembly, 
and  will  add  to  the  wealth,  prosperity  and  advancement  of 
Indiana  :  Therefore,  Be  it  enacted,”  etc.,  etc.” 

The  Act  of  1846  in  its  enacting  clauses  embodied  the  basis 
on  which  it  was  proposed  to  adjust  the  debt,  viz.,  by  dividing 
the  interest  only,  as  set  forth  in  the  preamble,  one-half  to 
be  paid  by  taxation,  and  one-half  by  the  canal  tolls,  revenues, 
Ac.  By  the  32d  section  of  the  same  act,  the  State  reserved, 
however,  the  option  of  dividing  the  principal,  also,  by  calling 


3 


in,  at  her  pleasure,  the  certificates  which  were  to  be  first  is¬ 
sued  under  the  1st  section  of  the  act,  and  issuing,  in  lieu 
thereof,  two  certificates  for  the  principal,  one  chargeable  on 
taxation  and  the  other  chargeable  on  the  canal,  its  tolls, 
revenues,  &c. 

This  option  was  exercised  in  the  first  section  of  the  sup¬ 
plementary  Act  of  184-7,  and  the  certificates  were  then  issued 
in  the  form  in  which  they  now  exist ;  as  the  bond-holders,  by 
this  provision  of  the  act  (sec.  32),  were  to  look  to  the  canal, 
its  tolls  and  revenues  exclusively  as  a  security  for  the  pay¬ 
ment  of  the  one-half  of  both  principal  and  interest  of  the 
original  debt,  they  required  more  specific  guarantees  and 
covenants  for  the  protection  of  the  security  thus  provided 
than  were  contained  in  the  Act  of  1846.  Hence,  for  this 
purpose  and  also  to  supply  other  deficiencies  in  that  act, 
the  Act  of  1847  was  passed,  which  contains,  among  others, 
the  following  sections,  viz. : 


Section  14,  Act  of  1847,  declares  that  “  in  order  to  demon¬ 
strate  the  good  faith  of  Indiana,  and  for  the  removal  of  all 
doubts,  and  with  a  view  to  create  general  confidence  in  the 
arrangements  made  by  the  State  for  the  liquidation  of  its 
debts,  be  it  enacted,  that  the  tolls,  revenues  and  profits  of  the 
said  canal  and  its  appurtenances,  present  and  future,  etc.,  etc., 
shall  remain  and  be  inviolate  and  in  full  force  ;  and  the 
payment  of  the  principal  moneys  and  the  interest  on  the 
certificates  and  stock  intended  to  be  created  pursuant  to  the 
said  act  and  this  act,  and  all  the  certificates  and  evidences 
of  the  title  thereof,  respectively,  shall  be  and  continue  effect¬ 
ual  and  inviolate  by  the  means  aforesaid ,  until  the  objects 
and  purposes  of  the  said  act,  and  of  this  present  act,  shall 
be  fully  accomplished.” 

Section  22  declares  :  “  The  debt  which  it  is  the  object  of 


UBRARY  - 

UNIVERSITY  OF  ILLINOIS 


4 


the  trust  created  by  the  said  recited  act  (as  amended  by  this 
act)  to  liquidate,  as  in  the  said  act  is  mentioned,  having 
been  contracted  under  the  authority  of  the  State  of  Indiana, 
and  for  the  service  of  the  people  of  that  State ,  and  it  being 
desirable,  as  well  for  the  credit  of  the  State,  as  also  to 
establish  confidence  in  the  public  in  general,  and  the 
subscribers  in  particular  [meaning  the  subscribers  to  the 
advance  for  the  completion  of  the  canal  to  Evansville],  to 
secure  the  utmost  punctuality  in  the  fulfilment  of  the  objects 
of  the  said  trust,  it  is  hereby  declared,  that  the  tolls  and 
revenues  of  the  said  canal,  present  and  future,  and  the  lands 
and  lots  so  conveyed  or  intended  to  be  conveyed,  as  herein¬ 
before  mentioned,  and  the  proceeds  thereof,  when  sold,  shall 
be,  and  the  same  are  hereby  specially  pledged,  to  form  a  dis¬ 
tinct  and  particular  fund  for  the  redemption  of  the  stock  and 
certificates  to  be  issued  in  pursuance  of  the  said  recited  act 
and  of  this  act ;  and  the  said  State  shall  not  direct  or  per¬ 
mit  any  appropriation  to  be  made  of  such  tolls  and  revenues, 
lands  and  proceeds,  or  any  of  them,  for  the  general  purposes 
of  the  State,  or  otherwise  howsoever ,  other  than,  and  except 
for  the  purposes  of  the  said  trust,  as  directed  by  the  said  act 
(as  amended  by  this  act),  until  the  said  stock  and  certifi¬ 
cates,  and  all  interest  thereon,  shall  have  been  fully  paid  and 
satisfied  out  of  the  tolls  and  revenues  of  the  said  canal,  or 
the  State  shall  have  redeemed  said  stock  and  certificates  by 
the  payment  of  the  principal  thereof  /  the  right  of  doing 
which,  after  twenty  years,  from  the  nineteenth  day  of  Jan¬ 
uary,  1846,  is  hereby  reserved  by  the  State,  as  provided  in 
the  act  to  which  this  is  an  amendment.” 

These  were  positive  and  comprehensive  covenants,  not 
only  restraining  the  State  from  every  kind  and  degree  of  in¬ 
terference  with  the  present  and  prospective  revenues  of  the 
canal,  which  were  the  sole  security  and  reliance  of  the  credit- 


5 


ors,  but  imposing  upon  it  also  the  most  sacred  obligations  to 
maintain  that  security  and  reliance,  unchanged  in  character 
and  unimpaired  in  value,  until  their  debt  was  paid. 

They  were  assurances  and  pledges  of  good  faith  by  the 
State  of  Indiana  to  her  creditors,  which  constituted  the  very 
essence  of  the  contract ,  which  were  required  by  the  nature  of 
that  security,  and  were  expressly  designed  to  establish  the 
confidence  of  the  bond-holders  in  particular  and  the  public 
in  general  in  the  arrangement,  and  to  induce  the  former  to 
believe  that  they  would  be  justified  in  surrendering  their 
bonds,  taking  in  lieu  thereof  the  new  securities,  and  in 
advancing  large  sums  of  money  for  the  prompt  and  effective 
completion  of  the  canal. 

All  these  provisions  were  evidently  inserted,  not  only  to 
demonstrate  the  good  faith  with  which  the  State  of  Indiana 
intended  to  provide  for  the  full  and  complete  payment  of  her 
existing  indebtedness,  principal  and  interest,  but  also  to  as¬ 
sure  her  creditors  that  if  they  complied  (as  they  have  done) 
with  their  part  of  the  contract,  she,  on  her  part,  would  neither 
do,  permit,  nor  suffer  any  act  tending  to  diminish,  divert  or 
interfere  with  the  tolls,  revenues,  etc.,  of  the  canal. 

The  subsequent  enactment  of  a  general  Railroad  Law, 
which  enabled  competing  lines  of  railroads  to  destroy  the 
revenues  of  the  canal,  has  interfered  with  and  absolutely 
prevented  the  carrying  into  effect  the  provisions  of  the  Bill 
of  1846-’47,  and  the  holders  of  the  Canal  Certificates,  by  no 
fault  of  their  own,  have  been  deprived  of  the  security  which 
the  State  had  set  apart  for  their  benefit.  And  although  they 
have  received  from  the  State  payment  of  one-half  of  the  debt 
originally  held  by  them  in  1847,  they  have  yet  on  hand, 
practically  valueless,  one-half  of  the  said  original  debt,  with 

accrued  interest  unpaid,  unprotected  and  unprovided  for. 

The  claim,  therefore,  of  the  bond-holders  is  predicated  on 

this  breach  of  faith  on  the  part  of  the  State,  whereby  the 


6 


security  pledged  for  the  payment  of  their  debt,  and  on  which 
they  relied,  was  destroyed.  They  also  claim  that,  if  the 
State  has  violated  that  proviso  of  section  8  of  the  Act  of 
1847,  which  declares  “that  the  State  will  make  no  provision 
whatever  hereafter  to  pay  either  principal  or  interest  on  any 
internal  improvement  bond  or  bonds  until  the  holder  or 
holders  thereof  shall  have  first  surrendered  said  bonds  to 
the  agent  of  State,  and  shall  have  received,  in  lieu  thereof, 
certificates  of  stock,  as  provided  in  the  first  section  of  this 
act,  anything  in  this  act  to  the  contrary  notwithstanding,” 
by  the  payment  of  any  of  the  internal  improvement  bonds 
then  outstanding,  principal  and  interest,  that  in  law  and 
equity  she  is  bound  to  do  equal  justice  to  all  other  of  the 
creditors. 

In  submitting  this  brief  memorial,  we  declare  our  convic¬ 
tion  that  the  time  has  arrived  for  a  full  and  fair  understand¬ 
ing  of  the  claims  of  the  Canal  Certificate  holders,  and  how 
far  they  are  entitled  to  consideration  and  recognition.  While 
those  we  represent  have  no  doubt  that  they  have  a  just  claim 
against  the  State  of  Indiana  for  the  payment  of  these  certifi¬ 
cates,  with  arrears  of  interest,  according  to  the  terms  of  the 
act,  we  are  aware  that  a  portion  of  the  people  of  your 
State  entertain  an  opposite  view,  and  consider  that  the 
Wabash  and  Erie  Canal  was  taken  by  the  bond-holders  in 
full  payment  of  one-half  of  the  old  State  Bonds,  issued  from 
1832  to  1839.  This  interpretation,  however,  we  do  not  consent 
to.  We  regard  it  as  utterly  repugnant  to  the  plain  letter  of  the 
acts.  In  order,  therefore,  to  remove  all  doubts  on  this  point, 
and  to  prove  to  your  honorable  body  and  to  your  constituents 
that  the  bond-holders  desire  nothing  from  you  but  what  they 
are  justly  entitled  to,  and,  anxious  as  we  are  to  dispose  of  this 
entire  question  on  the  highest  ground  of  justice  to  .the  State, 
her  people,  and  the  claimants,  we  respectfully  ask  that,  if  you 


7 


are  not  willing  to  grant  the  relief  asked  for,  your  honorable 
body  will  consent  to  submit  the  question  of  the  State’s  lia¬ 
bility  in  the  premises,  and  the  stock -holders’  rights,  to  such 
judicial  tribunal  as  your  honorable  body  may  select,  and  by 
whose  decision  we  are  willing  to  abide. 


All  of  which  is  respectfully  submitted. 


New  York,  December ,  1870. 


For  Messrs.  Dent,  Palmer  &  Co., 

44  44  N.  M.  Rothschild  &  Sons, 

u  44  Baring,  Brothers  &  Co., 

44  44  Frederick  Huth  &  Co., 


r 


i 

i 


j 


London  Committee , 
representing  the  holders 
of  Indiana  Canal  Cer¬ 
tificates. 


44  Estate  of  George  Peabody, 

George  Mosle, 
August  Belmont, 
James  Tinker, 

A.  Gracie  King, 


New  York  Committee , 
representing  the  holders 
of  Indiana  Canal  Cer¬ 
tificates. 


I 


